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22° Nicosia,
20 May, 2019
 
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Weak Greek economy threatened by world unrest

The country has not implemented the many necessary reforms that would facilitate investment

Athanasios Ellis

Athanasios Ellis

The world economy is being tested again. When big countries sneeze, the small and weak ones catch a cold. Greece, as the eurozone’s weakest link, emerges as the first easy victim.

International investors, those we theoretically want to attract, are already skeptical about the prospects of the Greek economy. And in today’s worsening environment, with trade wars and market turbulence, it will be even more difficult for those investors to place their money in Greece – with the exception, to a certain degree, of the real estate market.

This also applies to local entrepreneurs who are reluctant to invest in the country. Everyone – Greeks and foreigners – has to cope with an unfriendly environment, characterized mainly by bureaucracy, corruption and entangled interests and, secondly, with high taxes and levies.

Greece remains a risk, a situation not entirely of its own making. The whole region is being tested. The Italian crisis and the multilevel uncertainty taking hold in Turkey are negative developments for which Greece is not responsible but which inevitably have an impact on this country.

Even the “distant” Brexit, which is already affecting the European economic environment, is not helping.

At the political level, developments in Europe do not allow for any optimism either. The rise of “antisystemic” – and by extension anti-European – parties in most EU member-states is gnawing away at the stability and prospects of the European economy.

This is now true of Germany, the traditional leader of the bloc, the locomotive of its economy and a key pillar of its political stability.

Again, we, as the weakest link, are the first that could be at risk.

The “post-bailout era” finds Greece unprotected and faced with international investors reluctant to buy Greek bonds – whose yields remain at much higher levels than those of the other EU member-states – and risk investing with a long-term horizon.

Although all Greek parties now agree that international investments are a prerequisite for growth and an increase in employment, the country has not implemented the many necessary reforms that would facilitate investment, and not only does it continue to be a risk, but it also suffers from the migration of the most capable and productive members of society, whose presence would have been pivotal in the effort to improve and grow the Greek economy.

 

 

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